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Dollar Edges Higher; U.S. GDP Quarterly Data Due -Breaking


© Reuters.

Peter Nurse The U.S. Dollar edged up in European early trade on Thursday but was still near its one-month lowest amid fears that aggressive tightening by Federal Reserve might already slow economic growth.

The, which measures the greenback against six currencies and trades at 3:05 am ET (705 GMT), traded slightly higher at 102.095. This is still well below the two-decade high of 105 in May.

According to Wednesday’s release, the Fed met in May and the Fed policymakers remained true to the plan of increasing the Fed’s interest rate by half a percentage point each meeting. The next meetings will take place next month.

They also suggested a possible pause in rate increases after July and June’s increase, as Raphael Bostic, President of Atlanta Federal Reserve, had earlier suggested.

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Slowing economic growth has led to the reduction of Fed tightening. Retailers reported disappointing results last month as discretionary spending by consumers is cut back as petrol prices soar.

The release of the U.S. quarterly number for the first quarter, with a 1.3% drop, will be the focus of attention later in this session. Weekly data is also expected.

“We think that the downside potential for the dollar is shrinking, especially given a more balanced positioning after a widespread position squaring and a still supportive Fed story,” said analysts at ING, in a note.

The single currency fell 0.2%, to 1.0664. This was after Christine Lagarde (European Central Bank President) signaled that there would be no negative effects in the Eurozone’s third quarter.

The risk-sensitive fell 0.1% at 1.2558 and 0.1% at 127.22. While the gain-oriented fell 0.3%, to 0.7070, after Wednesday’s meeting of Reserve Bank of New Zealand.

The index rose 0.1% to 16.3788. Economists expect the Turkish central bank will keep its benchmark rate at 14% during its policy-setting meeting on Thursday. Inflation soared.

Russia’s central bank is also set to hold an extraordinary rate-setting meeting later Thursday, the day after the country’s declined 0.02% after rising 0.05% in the previous week, according to data from statistics service Rosstat.

Annually, the rate of change slowed from 17.69% to 17.51% a week prior. This could allow the central bank to reduce its key to 14%.